“ Common Stock ” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“ Common Stock Equivalents ” means any securities of the Company or its Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“ Company ” shall have the meaning ascribed to such term in the Preamble.

 

“ Company Counsel ” means Sullivan & Cromwell LLP, with offices located at 1888 Century Park East, Suite 2100, Los Angeles, California  90067.

 

“ DWAC ” shall have the meaning ascribed to such term in Section 2.2(a)(iii).

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any 401(k), stock or option plan duly adopted for such purpose by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement; provided , however , that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (c) securities pursuant to stock splits, stock dividends or distributions, recapitalizations and similar events affecting the Common Stock and (d) securities pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company; provided , however , that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or the holder of assets in a business synergistic with the business of the Company; provided , further , that, any such transaction shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

“ GAAP ” shall have the meaning ascribed to such term in Section 3.1(h).

 

“ Liens ” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction, other than restrictions imposed by securities laws.

 

“ Material Adverse Effect ” means: (a) a material adverse effect on the Company’s ability to perform in any material respect its obligations under any Transaction Document, or (b) a material adverse effect on the results of operations, assets, business or

 

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financial condition of the Company and its Subsidiaries, taken as a whole; provided , however , that none of the following, in and of itself or themselves, shall constitute a Material Adverse Effect:  (i) changes in the economy or financial markets generally in the United States or changes that are the result of acts of war or terrorism; (ii) changes that are the result of factors generally affecting the banking industry in which the Company and its Subsidiaries operate; and (iii) a decline in the price of the Company’s Common Stock on the Trading Market; provided, that, the exception in this clause (iii) shall not prevent or otherwise affect a determination that any change, effect, circumstance or development underlying such decline has resulted in, or contributed to, a Material Adverse Effect.

 

“ Material Permits ” shall have the meaning ascribed to such term in Section 3.1(m).

 

“ Per Share Exercise Price ” equals $20.20 (being 110% of the Per Share Purchase Price), subject to adjustment as set forth in the Warrant.

 

“ Per Share Purchase Price ” equals $18.36, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement and on or prior to the Closing Date.

 

“ Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

“ Prospectus ” means the base prospectus filed with the Registration Statement.

 

“ Prospectus Supplement ” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission and delivered by the Company to each Purchaser prior to or at the Closing.

 

“ Purchaser ” shall have the meaning ascribed to such term in the Preamble.

 

“ Purchaser Party ” shall have the meaning ascribed to such term in Section 4.5.

 

“ Registration Statement ” means the effective registration statement, as amended, filed with the Commission (File No. 333-159999), which registers the sale of the Securities to the Purchasers.

 

“ Required Approvals ” shall have the meaning ascribed to such term in Section 3.1(e).

 

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“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“ Rule 424 ” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“ SEC Reports ” shall have the meaning ascribed to such term in Section 3.1(h).

 

“ Securities ” means the Shares, the Warrants and the Warrant Shares.

 

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“ Series A Warrants ” means, collectively, the Series A Common Stock greenshoe warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which shall be exercisable commencing on the Closing Date and have a term of exercise equal to six months from the Closing Date, in the form of Exhibit A attached hereto.

 

“ Series B Warrants ” means, collectively, the Series B Common Stock greenshoe warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which shall be exercisable commencing on the Closing Date and have a term of exercise equal to one year from the Closing Date, in the form of Exhibit A attached hereto.

 

“ Shares ” means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.

 

“ Short Sales ” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

 

“ Subscription Amount ” means, as to each Purchaser, the aggregate amount in cash to be paid for the Shares and Warrants purchased hereunder as specified below such Purchaser’s name on the signature page hereto executed by such Purchaser and next to the heading “Subscription Amount,” in United States dollars.

 

“ Subsidiary ” means any subsidiary of the Company as set forth in the SEC Reports, and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

“ Trading Day ” means a day on which the Trading Market is open for trading.

 

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“ Trading Market ” means the Nasdaq Global Select Market, (or any successors thereto).

 

“ Transaction Documents ” means this Agreement, the Warrants and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“ Transfer Agent ” means Wells Fargo Shareowner Services, the current transfer agent of the Company, with a mailing address of P.O. Box 64874, St. Paul, MN 55164-0874 and a facsimile number of (651) 450-4078, and any successor transfer agent of the Company.

 

“ Warrants ” means the Series A Warrants and the Series B Warrants.

 

“ Warrant Shares ” means the shares of Common Stock issuable upon exercise of the Warrants.

 

“ WS ” means Weinstein Smith LLP, with offices located at 420 Lexington Avenue, Suite 2620, New York, New York 10170-0002.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1           Closing .  At the Closing, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, (a) up to an aggregate of $50,000,000 Shares and (ii) Warrants to purchase such number of additional shares of Common Stock as determined in accordance with Section 2.2(a), as to each Purchaser for such Subscription Amount as is specified below such Purchaser’s name on the signature page hereto.  As soon as practicable, but in no event more than 24 hours, after the satisfaction or waiver of the conditions set forth in Section 2.3 (other than those conditions that by their nature are to be satisfied at the Closing but subject to the fulfillment or waiver of those conditions), the Closing shall occur at the offices of Sullivan & Cromwell LLP, 1888 Century Park East, Los Angeles, California 90067, or such other location as the parties shall mutually agree.  The date on which the Closing occurs is referred to herein as the “ Closing Date .”

 

2.2           Deliveries .

 

(a)           On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i)            this Agreement duly executed by the Company;

 

(ii)           a legal opinion of Company Counsel, substantially in the form of Exhibit B-1 attached hereto;

 

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(iii)          a legal opinion of Jared M. Wolff, General Counsel to the Company, substantially in the form of Exhibit B-2 attached hereto;

 

(iv)          a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver via the Depository Trust Company Deposit Withdrawal Agent Commission System (“ DWAC ”) that number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser;

 

(v)           a Series A Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 50 % of the Shares issuable to the Purchaser on the Closing Date, with an exercise price equal to the Per Share Exercise Price (such Warrant certificate may be delivered within three Trading Days of the Closing Date);

 

(vi)          a Series B Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 50 % of the Shares issuable to the Purchaser on the Closing Date, with an exercise price equal to the Per Share Exercise Price (such Warrant certificate may be delivered within three Trading Days of the Closing Date); and

 

(vii)         the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).

 

(b)       On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i)            this Agreement duly executed by such Purchaser; and

 

(ii)           such Purchaser’s Subscription Amount by wire transfer of immediately available funds to the account as specified in writing by the Company.

 

2.3           Closing Conditions .

 

(a)           The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)            the accuracy in all material respects, when made and on the Closing Date (unless as of a specific date therein), of the representations and warranties of the Purchasers contained herein;

 

(ii)           the performance in all material respects of all obligations, covenants and agreements of each Purchaser hereunder required to be performed on or prior to the Closing Date; and

 

(iii)          the delivery by each Purchaser of the item set forth in Section 2.2(b)(i) of this Agreement.

 

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(b)       The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)            the accuracy in all material respects, when made and on the Closing Date (unless as of a specific date therein), of the representations and warranties of the Company contained herein;

 

(ii)           the performance in all material respects of all obligations, covenants and agreements of the Company hereunder required to be performed at or prior to the Closing Date; and

 

(iii)          the delivery by the Company of the items set forth in Section 2.2(a)(i), (ii) and (iii) of this Agreement.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations and Warranties of the Company .  Except as disclosed in reasonable detail in the SEC Reports, the Company hereby represents and warrants to each Purchaser as of the date hereof:

 

(a)           Subsidiaries .  All of the direct and indirect significant subsidiaries (as defined in Rule 1-02(w) of Regulation S-X) of the Company are set forth in the SEC Reports.  The Company owns, directly or indirectly, all of the capital stock or other equity interests of Pacific Western Bank, a California state-chartered bank (the “ Bank ”), free and clear of any Liens, and all of the issued and outstanding shares of capital stock of the Bank are validly issued and are fully paid, non-assessable and were issued free of preemptive and similar rights to subscribe for or purchase securities.

 

(b)           Organization and Qualification .  The Company and each of its Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not reasonably be expected to result in a Material Adverse Effect and, to the Company’s actual knowledge, no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(c)           Authorization; Enforcement .  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder

 

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and thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith other than in connection with the Required Approvals.  Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law or public policy.

 

(d)           No Conflicts .  The execution, delivery and performance by the Company of the Transaction Documents, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not reasonably be expected to result in a Material Adverse Effect.

 

(e)           Filings, Consents and Approvals .  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.2 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) application(s) to the Trading Market for the listing of the Securities for trading thereon in the time and manner required thereby, (iv) such filings as are required to be made under applicable state securities laws and (v) such consents, waivers, authorizations or orders, or such filings, as have been obtained or made (collectively, the “ Required Approvals ”).

 

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(f)            Issuance of the Securities; Registration .  The Shares and Warrants are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and, in the case of the Shares, nonassessable, free and clear of all Liens imposed by the Company.  The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants.  The Registration Statement was declared effective under the Securities Act on June 30, 2009 and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have, to the actual knowledge of the Company, been instituted or are threatened by the Commission.  The Company, if required by the rules and regulations of the Commission, proposes to file the Prospectus Supplement with the Commission pursuant to Rule 424(b).  At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed or will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed or will conform in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(g)           Capitalization .  The capitalization of the Company is substantially as set forth in the Prospectus Supplement, as updated by the SEC Reports.  As of the date of this Agreement, the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  As a result of the purchase and sale of the Securities or pursuant to equity compensation plans or agreements filed as exhibits to the SEC Reports, there are no outstanding options, warrants, script rights to subscribe for, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is bound to issue additional shares of Common Stock or Common Stock Equivalents, in each case issued by the Company.  The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and

 

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will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the actual knowledge of the Company, between or among any of the Company’s stockholders.

 

(h)           SEC Reports; Financial Statements .  The Company has complied in all material respects with requirements to file or furnish, as applicable, all reports, schedules, forms, statements and other documents under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the one year preceding the date hereof (or such shorter period as the Company was required by law or regulation to file or furnish, as applicable, such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “ SEC Reports ”) on a timely basis or has received a valid extension of such time and has filed or furnished, as applicable, any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed or furnished, as applicable, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to the disqualification provisions set forth in Rule 144(i) under the Securities Act.  The financial statements of the Company included in the SEC Reports have been prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis during the periods involved (except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP), and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(i)            Material Changes; Undisclosed Events, Liabilities or Developments .  Since the date of the latest audited financial statements included within the SEC Reports, (i) there has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not materially altered its method of accounting, (iii) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (iv) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option or compensation plans.

 

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(j)                                      Litigation .  There is no action, suit, inquiry, notice of violation, Proceeding or investigation pending or, to the actual knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “ Action ”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) would reasonably be expected to result in a Material Adverse Effect if there were an unfavorable decision.

 

(k)                                   Labor Relations .  No material labor dispute exists or, to the actual knowledge of the Company, is imminent with respect to any of the employees of the Company which would reasonably be expected to result in a Material Adverse Effect.

 

(l)                                      Compliance.   Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (wh